Key Person Coverage
Key person insurance, also known as “key man insurance”, is a life insurance policy that a company purchases on a vital employee's life. The company is the beneficiary of the plan, and if that employee unexpectedly dies, the company receives the insurance payoff. Here's how life insurance can help with key person coverage at a company:
1
Financial Stability: The death of a key person can lead to financial instability in a company. The insurance payout can provide a financial cushion to help the company stay afloat during the transition period.
2
Recruitment Costs: Hiring and training a competent replacement can be a lengthy and expensive process. The proceeds from the policy can help cover these costs.
3
Debt Repayment: If the company has outstanding debts, the insurance benefit can be used to pay off these debts and prevent potential financial distress.
4
Investor/Shareholder Confidence: The presence of key person insurance can enhance investor and shareholder confidence as it reflects the company's preparedness to handle sudden adversities.
5
Business Continuity: The insurance payout can help the company maintain business operations, meet its financial obligations, and avoid bankruptcy or closure.
6
Client Assurance: The death of a key person can lead to uncertainty among clients. The policy's payout can help ensure business continuity and client service without interruption.
7
Plan designs for group key person coverage can be arranged in such a way for full cost recovery for the company. When financing the premiums for these plans, the out of pocket expenses can also be kept to a minimum for the most value.
Overall, key person life insurance can play a significant role in a company's risk management strategy. It can help mitigate the financial risks associated with the sudden loss of an employee who is crucial to the company's operations or profitability.
Meet James Petrinovich
Founder of Chestnut Capital
At the age of 4, Jamie unofficially began his career by helping his father put together marketing folders. Now, after being licensed for over 20 years, Jamie has become a seasoned veteran and has a deep desire to provide his clients with the best possible solutions. He has dedicated his career to assisting high net worth families in planning for a brighter future. Jamie can also aid businesses in rewarding and retaining their top-performing employees using sophisticated planning techniques.
Not only does Jamie take pleasure in working with his own high net worth clients throughout the nation, but he also shares his cutting-edge solutions with other advisors across the country. By empowering other advisors with the necessary tools and knowledge, Jamie and his team are ensuring the continued success of their most valuable clients.
As a former member of the distinguished Forum 400, Jamie’s production has also qualified him for the Million Dollar Round Table. He has forged relationships with some of the preeminent thought leaders and producers in the industry. Jamie continues to stay active in the industry by hosting and attending invitation-only peer group meetings from coast to coast, in an effort to continuously grow as an industry leader. For that reason, he has been nominated and serves on the advisory board for one of the country’s largest life insurance carriers.
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